Liberty holds tight

Discovery, Encore assets not going to HSN

NEW YORK — Liberty Media Group CEO Robert Bennett said Liberty’s investments in Discovery Communications and Encore Media were “extraordinarily unlikely” to be among assets transferred to Barry Diller’s HSN Inc. to pay for an increase in Liberty’s HSN stake.

Speaking at the PaineWebber media conference Friday, Bennett said Discovery and Encore were “too valuable” to be used for this purpose.

He also said Diller wanted assets “that he can manage,” which would rule out Liberty’s 50% stake in the Fox sports venture, which is run by Fox. It also would likely rule out Liberty’s stake in QVC Inc., which is majority owned by Comcast Corp.

Bennett’s comments reduce the potential assets that could be used for the $1 billion transfer, which is necessary because of HSN’s $4.075 billion acquisition of Universal Studio’s television assets. That deal will dilute Liberty’s 32% stake in HSN to 15%, but Liberty has said it plans to raise its stake back to 25% either by paying cash or assets worth $1 billion.

Aside from its 49% stake in Discovery or 80% stake in Encore, Liberty only has four other major interests — a 10% shareholding in Time Warner, a 42% stake in QVC Inc., 50% of Fox/Liberty sports venture and its stake in HSN. It has a few smaller interests, such as a stake in Black Entertainment, a group of music-related assets and $345 million worth of preferred securities in Fox Kids Worldwide.

Liberty had been considering using the Fox Kids security and could likely use a mix of assets to make up the $1 billion. Bennett refused to speculate about which assets were being considered and cautioned that “it will be more creative” than a straightforward transfer of assets.

He conceded that because Liberty is building a music business with the music-related assets, the music group “may or may not” make sense to be part of the transfer.

Bennett said Liberty has not ruled out using cash, although that isn’t considered as likely as a transfer of assets. He said the transfer would be finalized first-quarter next year.